Bank of America May Ask Courts to Resolve CFPB Zelle Investigation

Bank of America may ask a court to resolve the Consumer Financial Protection Bureau’s (CFPB) investigation of the bank’s processing of payments through the Zelle network.

The bank said in a Tuesday (Oct. 29) filing with the Securities and Exchange Commission (SEC) that it has been responding to the CFPB’s inquiry.

“The CFPB staff has initiated discussions with the corporation to pursue a resolution of the inquiry or file an enforcement action,” Bank of America said in the filing. “The corporation is evaluating next steps, including litigation.”

This disclosure follows similar ones made by J.P. Morgan Chase and Wells Fargo.

J.P. Morgan Chase said in a February SEC filing that it was responding to government inquiries related to the Zelle Network.

“The firm is responding to inquiries from civil government authorities regarding the handling of disputes related to transfers of funds through the Zelle Network,” the bank said in the filing. “The firm is cooperating with these inquiries and responding to requests for information.”

By August, J.P. Morgan Chase said that it was responding to inquiries from the CFPB and that it was evaluating next steps that could include litigation.

In its Consolidated Financial Statements for the six months ended June 30, the bank said: “In connection with this, the CFPB staff has informed JPMorgan Chase that it is authorized to pursue a resolution of the inquiries or file an enforcement action. JPMorgan Chase is evaluating next steps, including litigation.”

Wells Fargo said in a May SEC filing that U.S. authorities are investigating the handling of complaints about Zelle.

In its filing, the bank said: “Government authorities have been conducting formal or informal inquiries or investigations regarding the handling of customer disputes related to fund transfers made through the Zelle Network.”

In March 2023, five Senate Democrats said in a letter addressed to the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration (NCUA) and the Office of the Comptroller of the Currency (OCC) that Zelle’s “model has opened the door to fraud and scams on a tremendous scale.”

In particular, the senators spotlighted the issue of responsibility when things go awry, when fraud is in the mix.

Early Warning Services, the network operator of Zelle, said in an Oct. 17 press release that reports of scam and fraud involving the Zelle network decreased by nearly 50% in 2023 and that 99.95% of payments were sent without such reports.

The organization added that it has deployed user interface updates, new technology and consumer education to fight scams and fraud on the Zelle platform.